Why Rocket Lab Stock Is Falling Today

Rocket Lab USA (NASDAQ: RKLB) topped expectations in the first quarter but provided a subdued outlook for the quarter to come. Investors were disappointed, sending Rocket Lab shares down 12% at the open and down 9% as of 11:30 a.m. ET.

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Slowly building momentum

Rocket Lab is a leader among a generation of space stocks that have emerged to challenge the status quo in recent years. The company lost $0.12 per share in the first quarter, or about $30 million, on sales of $123 million. The numbers were in line with the company's guidance for a $33 million to $35 million loss on revenue of between $117 million and $123 million. Generally accepted accounting principles (GAAP) gross margin was 28.8%, better than the 25% to 27% guide.

Rocket Lab completed five launches in the quarter, generating $36 million in revenue. Its space systems unit made $87 million in sales and finished the quarter with a backlog of $645 million in future business.

But Rocket Lab said the second quarter will be a little slower than anticipated. The company is projecting $130 million to $140 million in revenue, which, at the midpoint, is below the $137 million consensus estimate. And Rocket Lab expects to lose $28 million to $30 million, which is far worse than the consensus $21 million loss estimate.

Is Rocket Lab stock a buy?

Investors are understandably excited about the opportunity in front of Rocket Lab, but patience will be needed. This is an early-stage company just beginning to ramp up its most exciting projects, and revenue is small enough that right now, weather-related launch cancellations or other one-off events can disrupt an entire quarter.

For long-term-focused investors, the most important news of the quarter is that the company's highly anticipated Neutron rocket, which will allow for larger payloads, is on track to launch in the second half of this year. Rocket Lab said the U.S. Air Force will be an early customer for the Neutron.

This is literally rocket science, and there are a lot of risks to the Rocket Lab bull case. But for investors who can handle some turbulence, this stock could be an intriguing part of a well-diversified portfolio.

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Lou Whiteman has positions in Rocket Lab USA. The Motley Fool recommends Rocket Lab USA. The Motley Fool has a disclosure policy.